"It all boils down to enabling advertisers to meet viewing audiences wherever they’re consuming content. Ultimately, marketers should be agnostic about whether they are reaching a consumer via a coaxial cable or an Ethernet cord." -Brian Stempeck, The Trade Desk
The tide of traditional television is turning, as consumers and marketers embrace its digital counterpart in connected television (CTV). Forrester suggests we’re reaching an inflection point, as TV becomes increasingly targeted, automated, and integrated with digital media and connected devices. This shift is happening across television’s major networks and content owners, and it's driving enormous growth in ad-supported streaming. In 2017 alone, for example, our platform saw the number of available CTV ad spots grow 10 times in size.
As more and more TV sellers monetize streaming inventory, here are a few trends we’re seeing:
The viewers have already moved.
This year has already been an exciting one for content owners across the board. Dish Network’s Sling TV became the largest internet-based live TV service with 2.2M subscribers; Hulu experienced 17% growth in its subscriber pool in a short four-month time span; and NBC’s Super Bowl LII was the most live-streamed event ever. In total, nearly three in four U.S. households consume content on streaming services.
It’s not a binary story, though, especially considering that 74% of U.S. households continue to pay for traditional TV. Instead of either or, many U.S. households are watching both types of TV. It all boils down to enabling advertisers to meet viewing audiences wherever they’re consuming content. Ultimately, marketers should be agnostic about whether they are reaching a consumer via a coaxial cable or an Ethernet cord.
But they need help to do this. Some of the sellers we work with are continually educating their buyers about the viewership split. Buyers want to know – what’s the share shift between CTV and traditional at that network, so they can allocate dollars proportionately.
Let programmatic demand prove its worth.
For any TV network executive, there’s a balancing act between the certainty of upfront commitments vs. the potential upside from the scatter market. And there are times when the “bird in hand” approach means a network is leaving money on the table.
Consider a sales team that is selling inventory at an average $20 CPM. For the leader of that sales team, there is a price point where it makes more economic sense to sell the ad programmatically. Let’s say a 30% increase in price, or $26 CPM, would turn heads in the network C-suite. If that’s the case, the network could set a price floor at $26, and only accept buyers willing to pay more than $26.
We’re seeing more sellers take this approach.
Empower marketers to find their own audiences.
Audience targeting has long been the driving force behind programmatic advertising. Time and time again, marketers and agencies have proven that they’re willing to pay higher CPMs to reach an audience define. Instead of reaching an age/gender demo, the automaker wants to target car shoppers, using its own CRM data. That’s the single best way to drive CPMs higher and bring incremental demand.
How do sellers enable this? It’s all about anonymous identification. When they sell their inventory, sellers need to ensure that advertisers have a way to match their audiences. That can be with a device ID, or enabling a device graph. As networks work with their SSPs and ad servers, this should be a key topic of conversation.
In digital advertising, the cookie and the mobile device ID are the common currency – that’s how advertisers build audiences, and they want to do the same thing in TV.
Build out a deep library of content.
Many TV sellers are growing their content libraries by offering access to earlier seasons and their back catalog of programming. This is a huge change from some network apps, which a couple years ago only had short snippets of content and relatively thin libraries. The opportunity to derive net-new revenue from existing content is an easy win. Discovery Inc., for example, increased the average viewing session time by 15% last year, now up to 75 minutes or more per session. Post-merger, Discovery is also taking Scripps’s content into 40 different languages and rolling it out globally.
Create a better consumer experience.
As fast as it has grown, the ad experience for consumers can still be frustrating. Frequency is probably the single biggest challenge – the consumer seeing the same ad over and over again, sometimes even in the same pod.
Some sellers we work with are trying to solve this, and prevent viewers from decamping for subscription-only models. Shorter ads, as pioneered by FX, is one solution. Frequency capping at the household level is another important consideration, and a huge reason to ensure that buyers have an ID on a user.
With more relevant audience targeting, higher CPMs, and frequency capping, the consumer experience can improve dramatically, without coming out of the sell side’s bottom line.
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